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Signals™ Headlines - April 3, 2015

FMC Commissioner Michael Khouri Requests Alliances Provide Congestion Information

FMC Commissioner Michael Khouri is calling on his fellow Commissioners to formally request all of the four major alliances of ocean carriers regulated by FMC to provide details on the steps each is taking to reduce congestion at U.S. ports. Commissioner Khouri noted, “We have received private reports and seen numerous press accounts that the operations of the four alliances – G6, CKYHE, Oceans 3, and 2M – may be a contributing factor in the chronic congestion at the West Coast ports, and perhaps at other port facilities.” Press reports have alleged that vessel loading practices at ports in Asia have significantly changed the mix of the alliance members’ containers on each vessel. Consequently, upon arrival at a West Coast port terminal, many containers now need additional intra-facility ground moves to and among each of the local terminals operated by the individual alliance members before these containers are dispatched.

Khouri noted that the Commission approved each of the alliances after full review of the alliance agreement under the standards set forth in Section 6 (g) of the 1984 Shipping Act. That provision requires the Commission to find that, by allowing the joint operation of competitor liner carriers, the operation of the alliance agreement will not produce unreasonable reductions in transportation service or unreasonable increase in transportation cost. “In terms of overall costs and service levels in the liner supply chain as experienced by U.S. exporters and importers, there has been deterioration in service and significant increase in costs due to several factors” Khouri said. Other factors also playing significant roles in port congestion include issues surrounding labor, chassis, and drayage drivers, among others. Commissioner Khouri is calling for each alliance to report promptly to the Commission on information and operational steps each is taking to ameliorate and eliminate congestion issues at U.S. ports. Further, he is calling for updates to be temporarily included in the alliance’s quarterly reports as currently required in each alliance agreement’s periodic reporting requirements.

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Metro Freight Services and FMC Agree to Settlement in Docket No. 14-33

The order of investigation issued by the Federal Maritime Commission in the matter of possible violations of the Shipping Act by Metro Freight Services, Inc, a licensed ocean forwarder and NVOCC based Linden, NJ, has been dismissed. In its Docket 14-13, FMC alleged Metro Freight Services had failed to comply with the Commission’s licensing regulations and collected freight forwarder compensation on 25 shipments that were not eligible for such compensation. The shipments in question moved under a service contract signed by G&M Export, a cargo owner, which FMC alleged shares common ownership with Metro Freight Services. FMC forwarding regulations prohibit licensed forwarders from collecting forwarding compensation shipments where the forwarder or any of related entities has a beneficial interest. Additionally, these regulations prohibit ocean forwarders from collecting compensation from carriers when the forwarder or any related person also issues a house bill of lading or undertakes common carrier responsibility for the shipment. According to the Docket 14-13, Metro Freight Services has paid a civil penalty of USD 100,000 to settle these allegations and agreed to dissolve G&M Export. Furthermore, FMC has suspended the license of Metro Freight Services to operate as ocean forwarder and NVOCC for a period of 90 days, or until it approves the application of Metro Freight Services to replace the Qualifying Individual for its FMC license, whichever occurs later.

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Transpacific Eastbound Carriers Update General Rate Increases for March, April, May 2015

Several carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, implemented General Rate Increases (GRIs) effective in March 2015. Carrier members Yang Ming, K Line, and Maersk implemented GRIs effective March 9, 2015 at USD 600 per FEU, with other container sizes as per formula. Hapag Lloyd postponed the effective date of this GRI from March 9, 2015 to March 16, 2015 and again to March 23, 2015. NYK Line postponed this GRI to April 1, 2015. Carrier members American President Lines (APL), CMA CGM, COSCO, Evergreen, Hanjin, Hyundai, and OOCL cancelled this GRI. Hapag Lloyd applied a GRI of USD 200 per FEU for origins in India, Pakistan, Sri Lanka, and Bangladesh, effective March 20, 2015; APL postponed their GRI of USD 200 per FEU for the same origins to May 1, 2015. This was the third GRI of the year for the East Asia/USA trade lane.

Several of the group’s member carriers have also filed a second GRI, effective April 9, 2015, of USD 600 per FEU, with amounts for 20′ containers varying by carrier. Carrier members who filed April GRIs include APL, CMA CGM, COSCO, Evergreen, Hanjin, Hapag Lloyd, Hyundai, K Line, Maersk, OOCL, Yang Ming, and NYK Line. APL will not apply the GRI to cargo originating in Japan. This will be the fourth GRI of the year for the East Asia/USA trade lane.

Member carriers Evergreen and Hyundai updated their FMC tariff to reflect GRIs of USD 1000 per FEU; OOCL filed a GRI at USD 800 per FEU; Hanjin filed a GRI at USD 600 per FEU. Hapag Lloyd will apply a GRI of USD 200 per FEU for origins in India, Pakistan, Sri Lanka, and Bangladesh, effective May 1, 2015. This will be the fifth GRI of the year for the East Asia/USA trade lane.

The TSA’s fifteen carrier members are: American President Lines, China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd AG, Hyundai Merchant Marine, “K” Line, Maersk Line, Mediterranean Shipping, NYK Line, OOCL, Yang Ming Marine, and Zim Integrated Shipping Services. The group’s web site at www.tsacarriers.org provides additional information; however, each carrier maintains its own tariffs and controls its own pricing. The TSA Carrier group only issues recommended guidelines to its member carriers. Website addresses for all carriers are listed on www.fmc.gov.

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TSA Westbound Carriers Implement General Rate Increases Effective April 1, 2015

Several members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes, implemented General Rate Increases (GRIs) that were filed in their FMC tariff rules in March 2015. The GRI is USD 240 per 20ft dry container and USD 300 per 40ft dry container, effective April 1, 2015. GRI amounts for reefer containers vary by carrier. NYK Line implemented a GRI of USD 240 per 20ft dry container and USD 300 per 40ft dry container for cargo to/via U.S. West Coast Ports, and USD 160 per 20ft dry container and USD 200 per 40ft dry container to/via U.S. East Coast Ports, effective April 1.

For more information, visit www.tsa-westbound.org.

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